NPS Tier 2 Calculator — Calculate Returns on Flexible NPS
Calculate returns on NPS Tier 2 account which offers flexible withdrawals unlike the locked Tier 1. Compare with mutual funds and other investment options.
NPS Tier 2 is an optional investment account that offers the same fund management as Tier 1 but without any lock-in period. You can withdraw anytime without penalties making it function like a mutual fund with the added benefit of professional pension fund management and low expense ratios (0.01-0.09%). However unlike Tier 1 there is no additional tax deduction under 80CCD1B. Government employees get Section 80C benefit on Tier 2 contributions with a 3-year lock-in.
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NPS / Pension Calculator
Key Information
| Parameter | Details |
|---|---|
| Lock-In Period | None (withdraw anytime) |
| Minimum Contribution | Rs 250 per contribution |
| Expense Ratio | 0.01% - 0.09% (lowest in India) |
| Tax Benefit | Only for government employees (80C with 3yr lock-in) |
Calculate NPS Tier 2 returns
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Use Calculator NowFrequently Asked Questions
Is NPS Tier 2 better than mutual funds?
NPS Tier 2 has the lowest expense ratio in India (0.01-0.09%) versus mutual fund expense ratios of 0.5-2.5%. On a Rs 10 lakh investment the annual cost difference is Rs 4000-25000. However NPS Tier 2 offers limited fund choice (3 asset classes versus thousands of mutual fund schemes) and lacks the flexibility of SIP and STP options that mutual funds provide.
What returns does NPS Tier 2 give?
NPS Tier 2 returns depend on your asset allocation: Equity (E) class has returned 12-14% CAGR over 10 years. Corporate Bond (C) class returns 8-10%. Government Securities (G) class returns 7-9%. A balanced allocation (50% E 30% C 20% G) has historically delivered 10-12% CAGR making it competitive with balanced mutual funds at a fraction of the cost.
Can I transfer from NPS Tier 2 to Tier 1?
No direct transfer from Tier 2 to Tier 1 is not allowed. They are separate accounts with different rules. You can withdraw from Tier 2 and make a fresh contribution to Tier 1 but this does not carry over any tax benefits from the original Tier 2 amount. Each account serves a different purpose: Tier 1 for retirement and Tier 2 for flexible investing.
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Last updated: March 2026